Question 1

A production function identifies the _____.

Accepted Answer

A production function identifies the highest possible output that can be produced by a given combination of inputs. It shows the maximum output that can be produced with a given level of inputs, assuming that the technology and knowledge about how to use them is constant. The production function helps firms determine the optimal combination of inputs to use to produce a given level of output.

Question 2

Use the following table to answer the questions : Table 7-3: shows the combinations of labor and capital required to produce various level of output.

-Refer to Table 7-3.Assume that capital remains fixed while labor is the only variable input used in production.If the firm is currently producing 26 units of output using three units of labor,what is the marginal product of labor at this point?

Accepted Answer

To calculate marginal product of labor, we need to see the additional output produced by adding one unit of labor while keeping capital constant.

From the table, we can see that producing 26 units of output with 3 units of labor requires 6 units of capital.

The total product of labor for 3 units of labor is 26 units of output.

If the firm adds one more unit of labor, the total product of labor becomes 34 units of output (i.e. 26+8).

The marginal product of labor at this point can be calculated as the additional output (8) divided by the additional unit of labor (1), which gives us a marginal product of labor of 8.

Therefore, the correct answer is C) 6, as there is a mistake in the options given.

Question 3

A firm that is operating in a technologically inefficient way:

Accepted Answer

A firm that is operating in a technologically inefficient way is not making as much money as it potentially can. This inefficiency means that the firm's costs are higher than they need to be, which could lead to lower profits or even losses. Therefore, the firm should explore ways to improve its technology or operations to reduce costs and increase its potential profits. Options could include investing in new machinery, improving processes, or upskilling staff to work more efficiently. Shutting down the firm immediately to reduce losses is not a good solution as it ignores the potential for improvement and future profitability.

Question 4

A technologically efficient level of output is the _____.

Accepted Answer

The answer of A technologically efficient level of output is...

Question 5

A production function for widgets will _____.

Accepted Answer

A production function shows the relationship between the inputs used (such as labor and capital) and the maximum quantity of output (in this case, widgets) that can be produced with those inputs. Therefore, option D is the correct choice. Option A refers to the cost of acquiring inputs and is not related to the production function itself. Option B is referring to the concept of marginal productivity, which is related to the production function but is not the same thing, and option C is not directly related to the production function either.

Question 6

What is meant by technological efficiency in production?

Accepted Answer

Technological efficiency in production refers to producing the maximum possible output from a given set of inputs. This means that the business is using its resources, including technology, to the fullest extent possible to maximize productivity and output. While using the latest available technology may increase efficiency, it is not the only factor considered in technological efficiency. Similarly, minimizing costs or using the least number of inputs may not result in maximum output, which is the ultimate goal of technological efficiency.

Question 7

A carpenter hammers nails each day at work.In each of the first three hours 50 nails were hammered and the marginal product of the fourth and fifth hours of work is 40 and 20 nails,respectively.Diminishing returns will be experienced in the _____ hour.

Accepted Answer

Diminishing returns occur when the marginal product decreases as additional units of input are added. The marginal product of the fourth hour of work is 40, which is higher than the marginal product of the fifth hour, which is 20. This indicates that the fifth hour is experiencing diminishing returns.

Question 8

Which of the following is true of fixed costs?

Accepted Answer

Fixed costs are those costs that do not vary with the level of output in the short term. While they are generally considered "fixed," they can indeed be changed, but doing so often involves significant expense or effort, especially if the change needs to happen quickly. This is because fixed costs are typically associated with investments in assets, facilities, or contracts that are not easily or inexpensively altered in the short term.

Question 9

A farmer is growing corn on an acre of land.Output will be 200 bushels if one worker is hired,500 if two,700 if three,850 if four,and 900 if five.The marginal product of the fourth worker is _____ bushels of corn.

Accepted Answer

The marginal product of the fourth worker is the additional output produced by the fourth worker, calculated as the difference in output when the fourth worker is hired compared to when only three workers were hired. This is 850 bushels (with four workers) minus 700 bushels (with three workers), which equals 150 bushels.

Question 10

If the average product of labor is 150 bushels of wheat when three workers farm an acre of land and the marginal product of the fourth worker is 75 bushels,then the total output with four workers is _____ bushels.

Accepted Answer

The total output with three workers is 3 workers * 150 bushels/worker = 450 bushels. Adding the marginal product of the fourth worker (75 bushels) gives a total of 450 + 75 = 525 bushels.

Question 11

Table 7.1 shows the quantities of labor and capital required to produce various levels of output.

Refer to Table 7-1.What is the average product of labor when four units of labor are used?

Accepted Answer

To calculate the average product of labor, we divide the total output by the quantity of labor. When four units of labor are used, the output is 56 units. So, the average product of labor is 56/4 = 14. Therefore, choice B is the correct answer.

Question 12

Which of the following correctly describes a production function?

Accepted Answer

A production function shows the relationship between inputs and output. It describes how much output can be produced from a given amount of inputs. Therefore, option B is the correct choice. Option A is incorrect because a production function does not show the minimum output, it shows the maximum output that can be achieved with given inputs. Option C is incorrect because a production function does not describe output-cost relationships, but rather input-output relationships. Option D is also incorrect because a production function does not identify the profit maximizing level of output, but rather shows the relationship between inputs and output.

Question 13

Table 7-2 shows the combinations of labor and capital that are used to produce various levels of output. 
Refer to Table 7-2.A rational producer would never operate with _____ units of labor and 2 units of capital.

Accepted Answer

The answer of Table 7-2 shows the combinations of labor...

Question 14

Economists use production functions to _____.

Accepted Answer

Production functions are used to define what is technically efficient for different combinations of inputs, showing the maximum output that can be produced with a given set of inputs.

Question 15

The ratio of the change in total product to the change in total quantity of the input being used is _____.

Accepted Answer

The ratio of the change in total product to the change in total quantity of the input being used is defined as the marginal product. Therefore, choice A is the correct answer. The other options are incorrect because they do not accurately describe this ratio. Choice B is incorrect because as employment levels of the input vary, the marginal product typically changes rather than staying constant. Choice C is incorrect because the average product is the total product divided by the quantity of the input, while the ratio being discussed is the change in total product divided by the change in quantity of the input. Choice D is incorrect because the marginal rate of technical substitution is a different concept than the ratio being discussed.

Question 16

A carpenter hammers nails each day at work.During the first hour she can hammer 120 nails,the second hour 100 nails,the third hour 90 nails,the fourth hour 60 nails,and the fifth hour 10 nails.Her marginal product in the third hour is _____ nails.

Accepted Answer

The marginal product is the additional output produced by adding one more unit of input. In this case, the input is time spent hammering nails.

The marginal product in the third hour is calculated by taking the difference between the total number of nails hammered in the third hour (90) and the total number of nails hammered in the second hour (100).

Marginal product = 90 - 100 = -10

The negative sign indicates a decrease in output. So, the carpenter's marginal product in the third hour is -10 nails.

Therefore, the best choice is C.

Question 17

The ratio of total product to the total quantity of the input being used is _____.

Accepted Answer

The ratio of total product to the total quantity of the input being used is referred to as the average product. It is obtained by dividing the total product by the total quantity of input used. The average product is a measure of the productivity of a specific input, and it indicates how efficiently the input is being used.

Question 18

A carpenter hammers nails each day at work.The average number of nails hammered over the first three hours is 50,and the marginal product of the fourth and fifth hours of work is 40 and 20 nails,respectively.The total output after five hours work is _____ nails.

Accepted Answer

The average number of nails hammered over the first three hours is 50, which means that the total nails hammered in the first three hours is 150 (50 x 3).
The marginal product of the fourth hour is 40 nails, so the total number of nails hammered in the fourth hour is 40.
The marginal product of the fifth hour is 20 nails, so the total number of nails hammered in the fifth hour is 20.
Therefore, the total number of nails hammered in five hours is 150 + 40 + 20 = 210. Thus, the answer is (C) 210.

Question 19

A carpenter hammers nails each day at work.During the first hour she can hammer 120 nails,the second hour 100 nails,the third hour 90 nails,the fourth hour 60 nails,and the fifth hour 10 nails.The total product of five hours of work is _____ nails.

Accepted Answer

The total product of five hours of work is the sum of nails hammered each hour: 120 + 100 + 90 + 60 + 10 = 380 nails.

Question 20

A carpenter hammers nails each day at work.During the first hour she can hammer 120 nails,the second hour 100 nails,the third hour 90 nails,the fourth hour 60 nails,and the fifth hour 10 nails.The average product of five hours work is _____ nails.

Accepted Answer

The average product of five hours work is calculated by adding the total number of nails hammered in five hours and then dividing by 5. So, $ \frac{120 + 100 + 90 + 60 + 10}{5} = \frac{380}{5} = 76 $ nails.

Quiz 7: Production